Altria Profit Falls but Beats Forecasts

CHICAGO – Altria Group Inc. (MO) Wednesday said quarterly profit fell 6.9 percent, as one-time charges at its Kraft Foods business and a loss in its financial services unit offset higher tobacco profit.

Altria stock fell 1 percent as the company forecast 2005 profit that could be below analysts' estimates, despite essentially taking the first price increase on its major U.S. cigarette brands in 2-1/2 years last month.

"With the tobacco price increase that they took in December on their major brands, there was a good chance that they could raise '05, not slightly lower it," said Tim Ghriskey, chief investment officer at Solaris Asset Management, which counts Altria stock as a core holding.

Other analysts said the forecast was in line with estimates.

Profit for Altria — the maker of Marlboro cigarettes (search) and majority owner of Kraft Foods Inc. (KFT) — was $1.95 billion, or 94 cents a share, compared with $2.09 billion, or $1.02 cents as share, a year earlier.

Excluding one-time items, earnings from continuing operations were $1.08. Analysts on average forecast $1.06 a share, according to Reuters Estimates.

While shares traded lower on the earnings report, investors are focused more on key legal rulings that are expected soon.

These include a ruling from a U.S. appeals court on whether the government can use racketeering laws to force the tobacco industry to pay $280 million in damages and the appeal of a $10.1 billion jury verdict in Illinois, where the company was found to have deceived smokers into thinking "light" cigarettes were safer than regular cigarettes.